Diversified conglomerate Tata Group is contemplating to buy the heavily debt-ridden state-run carrier Air India from the government in partnership with Singapore Airlines, a leading daily reported on Wednesday citing unidentified sources.
Tata Group chairman N Chandrasekaran has held informal talks with the government, expressing preliminary interest in buying a controlling stake in Air India with a 51 per cent equity holding, as per a report in Economic Times. The government, which is also reportedly keen on retaining Air India as a domestic carrier, is happy with the Tata Group’s interest in the heavily debt-laden carrier, the report said.
Air India has been under intense competition from low-cost private airlines, is reeling under a debt of about Rs 50,000 crore, with about Rs 28,000 crore in working capital debt, and about Rs 4,000 crore in interest burden alone. It has not been profitable in 10 years, since at least the year 2007.
In the recent past, top government representatives, including Finance Minister Arun Jaitley and Civil Aviation Minister Ashok Gajapathi Raju have spoken openly about their plans to sell Air India.
The Tata Group has a significant presence in the Indian civil aviation space with two of its joint ventures including low-cost carrier AirAsia India in partnership with Malaysia's Air Asia, and full-service airline Vistara in partnership with Singapore Airlines.
There is a strong connection between the Tata Group and Air India. Tata Group patriarch JRD Tata launched Tata Airline in 1932. Post independence, it was incorporated as Air India International in 1948 as a joint venture between the government and the private sector to start overseas services. Five years after this, the government would nationalise the aviation industry bringing the airline under its control.